NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (C) NO.3635 OF 2007

Mummidi Apparao (D) Through LRs. … Petitioner(s)

Versus

Nagarjuna Fertilizers & Chemicals Ltd. & Anr. … Respondent(s)

W I T H

SPECIAL LEAVE PETITION (C) NO.3711 OF 2007

Mummidi Tulsamma … Petitioner(s)

Versus

Nagarjuna Fertilizers & Chemicals Ltd. & Anr. … Respondent(s)

W I T H

SPECIAL LEAVE PETITION (C) NO.4177 OF 2007

Nagarjuna Fertilizers & Chemicals Ltd. … Petitioner(s)

Versus

Mummidi Veeraraghavamma & Ors. etc. … Respondent(s)

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J U D G M E N T

AFTAB ALAM,J.

1. This batch of three special leave petitions arises from land acquisition

proceedings and the matter in dispute is the rate of compensation for the

acquired  lands  as  determined  by  the  Andhra  Pradesh  High  Court.  SLP

(Civil)  Nos.  3635  and  3711  of  2007  were  filed  on  behalf  of

claimants/landholders and SLP (Civil) No. 4177 of 2007 at the instance of

Nagarjuna Fertilizers and Chemicals Ltd. for whose benefit the lands were

taken  in  acquisition.  In  course  of  hearing,  counsel  appearing  for  the

claimants/landholders stated that they accepted the compensation fixed by

the High Court and did not wish to challenge the High Court judgment any

longer; hence, SLP (Civil) Nos. 3635 and 3711 of 2007 are dismissed as not

pressed. This leaves us to consider SLP (Civil) No. 4177 of 2007 filed by

the industrial establishment for which the acquisition was made.

2. The Government  of  Andhra Pradesh acquired  altogether  about 600

acres of land for the petitioner, Nagarjuna Fertilizers and Chemical Ltd. for

creation of green-belt around the industrial unit and for laying down pipes

for supply of water etc. The present SLP is in regard to lands measuring to

an area of 41.05 acres out of the total acquisition. The area of 41.05 acres,

forming the subject matter of dispute, was acquired in two proceedings. For

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the  area  of  6.11  acres  the  notification  under  Section  4  of  the  Land

Acquisition  Act  was  issued  on  25 January  1991  and  the  acquisition

proceeding  was  concluded  in  award  no.1/92.  Another  notification  under

Section 4 of the Act was issued on 2 December 1991 for the area of 34.94

acres and the second proceeding concluded in award no.2 of 1992. For the

purpose  of  fixing the  rate of  compensation  the Land Acquisition  Officer

classified  the  lands  covered  by  award  no.1/92  in  two  categories.  For

category one lands he fixed the market value @ Rs.42, 000/- Per acre and

for category two lands @ Rs.35, 200/- Per acre. The market value for the

lands  covered  under  award  no.2/1992  was  fixed  at  the  uniform  rate  of

Rs.37, 000/- Per Acre. The Land Acquisition Officer fixed the market value

as indicated above by firmly holding that the lands in question were purely

agricultural in nature. He also referred to an earlier acquisition under award

no.10 of 1988, dated 19 October 1988. In the earlier case the matter had

gone up to the High Court and the High Court had determined the amount of

compensation  @  Rs.82,  600/-  per  acre.  The  Land  Acquisition  Officer

observed that there was no distinction between the lands covered by award

no.10 of 1988 and the present lands and hence, the rate of compensation

fixed  for  the  earlier  acquisition  would  be  a  good  basis  for  fixing

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compensation in the present proceeding. (See award of the Land Acquisition

Officer at Pp.30, 31 and 34 of the SLP brief).

3. Aggrieved by the awards made by the Land Acquisition Officer the

landholders took the matter to the reference court under Sec.18 of the Act.

Before  the  reference  court  it  was  strongly  urged  on  behalf  of  the

claimants/landholders  that  the  Land  Acquisition  Officer  grossly  erred  in

treating  the  acquired  lands  as  merely  agricultural  lands.  The

claimants/landholders submitted that having regard to their location and the

developments  all  around  the  acquired  lands  had  fully  the  potential  of

developing into housing sites and as a matter of fact were fast taking up that

character; small pieces of land in close vicinity of or even abutting on the

acquired area were being sold for construction of dwelling units. In support

of their submission the claimants/landholders relied upon a number of sale

deeds (exts.B2 to B7) produced in evidence before the reference court. The

reference  court  accepted  the  case  of  the  claimants/landholders  and  the

Principal Senior Civil Judge, Kakinada by his judgment dated 30 October

2000 held that the sale deed ext. B2 formed a sound basis for fixing the rate

of compensation for the acquired lands. Exhibit B.2 is in regard to the sale

of a piece of land, 110 sq. yards in area, that took place on 23 July 1990 for

a consideration of Rs.14, 850/-. The Principal Senior Civil Judge observed

that the piece of land sold under the sale deed ext.B.2 just abutted on the

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acquired  land.  He  also  observed  that  though  the  sale  transaction  was

brought to the notice of the Land Acquisition Officer he rejected it on the

ground that it  related to S No.248 where house sites were already made,

whereas the acquired land was not readily fit as a housing site. Discussing

the evidentiary value of ext. B.2 the Civil judge observed as follows:

“No suggestions are made to R.W.4 to the effect that Ex. B.4 (sic. Ex.B.2) transaction is fraudulent transaction or nominal  transaction,  as  such  it  can  be  held  that  on considering the potential value of the site covered under Ex.B.2,  R.W.4 purchased the house site covered under Ex.B.2 It is to be further held that the site covered under Ex.B.2 is under approved lay out made in the year 1987 itself.  As  such  sale  transaction  under  Ex.B.2  can  be looked into, to see whether Ex.B.2 sale transaction can be relied upon as comparative or representative sale for fixation  of  the  market  value  for  the  present  acquired land.”

4. The market value of the acquired land on the basis of the sale deed

ext.B.2 worked out to Rs. 6, 53,400/- per acre. The Civil judge deducted one

third of the value so arrived at as development cost and came to the figure

Rs.4, 35,000/- Per acre. It recorded its finding as follows:

“Accordingly  I  find  that  market  value  fixed  by  Land Acquisition Officer for the acquired land covered under O.P.203/93  at  Rs.35,  200/-  is  not  adequate.  So  also market  value fixed  by Land Acquisition  Officer  at  the rate  of Rs.37,  000/-  for  the lands  covered under  O.Ps. 200/93,  201/93,  205/93,  206/93  and  208/93  is  not adequate. So also market value fixed at the rate of Rs. 42,000/-  for  the  land  covered  under  O.Ps.  202/93,

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204/93, is not adequate and market value fore the above lands is enhanced to Rs. 4, 35,600/- per acre. Claimants are  entitled  to  12%  additional  market  value  on  the enhanced  market  value,  30%  Solatium  on  enhanced market  value.  Claimants  are  also entitled  to  interest  at 9% p.a. for one year from the date of taking possession and  thereafter  at  15%  p.a.  till  payment  of  enhanced market value on the enhanced market value.  Claimants are not entitled to interest on additional market value and Solatium.”  

5. Against the order passed by the reference court,  the petitioner filed

appeals before the Andhra Pradesh High Court. During the pendency of the

appeals the petitioner also brought on record certified copies of the earlier

decrees and judgments of the High Court dated 11 August 2003 in A. S. No.

906/1999  and dated  28  February 2005  in  A.  S.  No.  664/2000  by which

compensation  for  the  lands  acquired  in  1985  for  the  same  purpose  of

creation of Green Belt for the petitioner’s factory was fixed @ Rs.82, 600/-

per acre.

6. The  High  Court,  however,  didn’t  disturb  the  basic  premise  of  the

Civil Judge that the sale deed ext.B.2 served as a good basis for fixing the

market value of the acquired land. But having regard to the small area of the

land  transferred  under  the  sale  deed  ext.B.2  and  further  in  view of  the

undeveloped state of the acquired land at the time of acquisition deemed fit

to deduct as development charges 50% from the market value of the land

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fixed on the basis of ext.B2. Thus by its judgment and order dated 9 October

2006 the High Court  arrived at  the figure of Rs.3,  25,000/-  per acre and

fixed the compensation at that rate. The High Court further clarified that the

claimants  would be entitled to 12% towards  additional  market  value and

other statutory benefits as laid down in the judgment of this Court in Sunder

Vs. Union of India, AIR 2001 SC 3516  

7. Mr.  Parasaran Learned Senior  Counsel  appearing  for  the petitioner

assailed the High Court judgment for accepting the sale deed ext.B.2 as the

basis for fixing the rate of compensation and merely enhancing the ratio of

deduction  from  1/3rd to  half.  Learned  counsel  submitted  that  the  entire

approach of the Civil Judge and the High Court was quite wrong. The sale

deed, ext.B.2 was in respect of a very small piece of land, only 110 square

yards in  area  that  was  purchased  with  the  declared  intent  to  construct  a

dwelling house.  The consideration shown in ext.B.2 could not,  therefore,

form the basis for determining the rate of compensation for  the acquired

land.  

8. Mr.  Parasaran  submitted  that  the  real  controversy  in  the  matter  is

whether at the time of acquisition the acquired land was agricultural or it

had the potential to develop into a housing site. He took the stand that the

acquired land was nothing but agricultural and it was wrong to see in it any

potential  to  develop  into  a  site  for  construction  of  houses.  He  further

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submitted that the Land Acquisition Officer had rightly taken the land as

purely agricultural. In support of the submission he invited our attention to

different passages in the awards made by the Land Acquisition Officer. He

also referred to the statements of witnesses examined before the court  to

contend  that  the  acquired  land  was  agricultural  in  nature  and  had  no

potential to develop into a housing site.  

9. Mr. Parasaran submitted that the High Court disposed of the appeal in

a very perfunctory manner. He also stated that the observations made by the

High Court in Paragraph 4 of the judgment hardly justified the final order

passed in the appeals. Learned counsel also questioned the direction of the

High Court for deduction of 50% as development charges from the value of

the land fixed by the court and contended that in the facts of the case the

ratio  of  deduction  should  have  been  much  higher.  In  support  of  the

submission he relied upon several decisions of this Court which we do not

consider necessary to mention here.

10. Mr. Parasaran also referred to the earlier judgment and decree of the

High Court dated 8 November 2003 by which compensation for the lands

acquired in the year 1985 was fixed @ Rs.82, 600/- per acre.  

11. Mr. Parasaran placed strong reliance on the government order bearing

G. O. Ms. No.81 H. M. Agrl. U.D. Dept. (12) M. A. dated 23 February 1989

issued by the  Govt.  of  Andhra  Pradesh  and published  in  the  AP gazette

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issue  no.  14  dated  6  April  1989.  The  aforesaid  order  prohibited  any

constructions  on the lands around the industrial  unit  or the sale of those

lands as house sites and set apart the use of those lands for the purpose of

green belt and afforestation. The learned Counsel submitted that in view of

the  government  order  it  was  meaningless  and  futile  to  contend  that  the

acquired lands had the potential of developing into housing sites since such

user of the land was expressly prohibited by the government.  

12. Learned  Counsel  appearing  on  behalf  of  the  respondents/claimants

supported the  Judgment  of  the Civil  Judge and submitted that  he rightly

took  into  account  the  potential  of  the  acquired  land  to  develop  into  a

housing site. Learned counsel submitted the finding that the acquired lands

had the potential to develop into housing sites is one of fact, arrived at on

proper  appreciation  of  the evidences  brought  before  the Civil  Judge and

warranted  no  interference  by  this  Court.  He  further  submitted  that  as  a

matter of fact the claimants/landholders at one time felt  aggrieved by the

large deduction, directed by the High Court from the market value of the

acquired land but they no longer wanted to make an issue of it.  Learned

counsel  submitted  that  there  was  a  background  to  the  acquisition  of  the

lands, forming the subject matter of dispute. In a public interest litigation

filed against the petitioner industrial unit for causing heavy environmental

pollution the Court directed for creation/extension of the green belt around

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the factory unit and that led to further acquisition of lands, including the

lands  forming the subject  matter  of  the present  dispute.  Learned counsel

submitted  the  net  result  is  that  the  common  man  went  to  the  Court

complaining  about  the  petitioner  industrial  establishment  causing

environmental pollution and ended up by having his lands forcibly acquired

for creation/extension of the green belt.  

13. In regard to the 1989 government order earmarking the lands around

the factory for afforestation and setting-up the green belt learned counsel

submitted  that  the  Government  order  was  published  in  the  gazette  on  6

April 1989 just a few months before the issuance of the Sec. 4 notifications

on  25  January  1991  and  2  December  1991.   He  further  submitted  that

having regard to the back ground in which the acquisitions were made it

would be quite unjust and unreasonable to put a cap onto the compensation

for  the  acquired  lands  on  the  basis  of  the  government  order  completely

disregarding the potential inherently acquired by the lands in question as a

result of the developments taking place all around in the natural course.

14. On hearing counsel for the parties and on a careful consideration of

the materials on record we are satisfied that this matter doesn’t merit any

interference by this Court.  The Civil Judge came to hold and find that the

acquired  lands  had  the  potential  to  develop  into  housing  sites  and

accordingly took ext.B.2 as the basis for fixing the rate of compensation.

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The High Court having regard to the present state of the lands enhanced the

ratio of deduction to half of the market value as worked out on the basis of

ext. B2. We are satisfied that compensation awarded by the High Court to

the  claimants/landholders  is  correct,  just  and  proper  and  warrants  no

interference by us.  

15. This special leave petition is dismissed. The parties shall bear their

own costs.  

…… ……………………J.

[Tarun Chatterjee]

…………………………J.

       [Aftab Alam]

New Delhi, November 21,  2008.

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